Multiple choice

What is/are the assumption(s) of Walter's approach?

  1. All earnings are either distributed or invested.

  2. Internal rate of return and market capitalisation rate are constant.

  3. Firm has infinite life.

  4. Debt or new equity is not issued for the purpose of financing investments.

  5. All of the above
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E Correct answer
Explanation

All of the above are assumptions of Walter's model.

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